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Does Breaking a Lease Hurt Your Credit?

6 min read

Last Updated: March 27, 2025

Table of contents

Key Takeaways

Breaking a lease doesn’t automatically impact your credit score.
If unpaid rent or fees go to collections after you break your lease, your credit score may be affected.
Communicating with your landlord before breaking your lease could help you find options with fewer penalties.

When you sign a lease for a rental property, you typically agree to pay rent for a set timeframe, often a year or more. However, changes in your circumstances, like marriage or divorce, a family emergency, a new job, or a job loss could force you to move out early before fulfilling your lease agreement. If this happens, you may wonder if breaking your lease will impact your credit.

Moving out and terminating your lease before the end of your lease term won’t automatically hurt your credit score. Still, breaking a lease can come with added costs.

If you struggle to pay fees, your credit score may be in danger. Damage to your credit score can make it challenging to qualify for loans and credit cards in the future. Understanding the potential consequences of early lease termination can help you protect your credit.

When does breaking a lease hurt your credit?

When you break your lease contract, you may owe back rent, damage fees, termination fees, or current rent. Left unpaid, those expenses may put your credit score at risk.

Landlords don’t typically report your monthly payments to a credit bureau. Therefore, your rental history doesn’t always appear on your credit report. However, if you can’t cover the fees for breaking your rental agreement, your previous landlord may report your unpaid debt to a collections agency. Accounts in collections usually appear on credit reports and damage credit scores. Negative information, like a collections account, may stay on your credit report for up to seven years.

If a broken lease contract has damaged your creditworthiness, there are steps you can take now to repair your credit score. One of the most important factors in calculating credit scores is payment history on your credit accounts, which is why even if you’ve had trouble paying your rent, you may be able to avoid damaging your credit further by keeping up with the minimum payment on your credit card.

Did you know?

If you don't have a credit card, a secured credit card from Discover could help you build your credit history.¹

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Review your lease before breaking it

Your leasing agreement should explain the rules and consequences for early lease termination. For example, you may have to provide a 30-day or 60-day written notice before leaving or you may risk higher fees. Before you speak with your landlord about breaking your lease, you should review the document’s termination clause and consult local tenant protections to know what to expect.

Are there fees or will you lose your security deposit for breaking your lease?

Landlords may charge tenants early termination fees. Your early termination fee may be one flat amount or the equivalent of several months’ rent. You might sometimes forfeit your security deposit by breaking a lease, even if you leave the unit in pristine condition.

You may be required to make all the rental payments remaining in your lease until a new tenant takes over. This varies, however, by location, as some states put certain obligations on the landlord to help find replacement tenants. Like in California, your landlord must make a "reasonable" effort to find a new tenant, the University of California Berkeley explains.

Does your city or state have laws regarding breaking a lease?

Under federal law, active military servicemembers have the right to break a lease if they’re transferred after the lease is made, according to the Administrative Office of the U.S. Courts. Some cities and states may also protect tenants breaking their leases for other reasons. In New York, for example, you may be able to break your lease with minimal penalties for the following reasons, according to the State Senate:

You or your partner are over 62 and moving into a senior residential facility.
You or your child are fleeing domestic violence.
Your rental unit falls short of safety or health codes, according to the Office of the New York State Attorney General.

Tenant protections vary by state and locality. You can check your local protections on the Department of Housing and Urban Development’s website or speak with a tenant rights attorney for legal advice.

Alternatives to breaking a lease to save your credit score

Communicating with your landlord or property manager before you break your lease can help you avoid penalties or fees. In many cases, working out an arrangement can save time, money, and effort for both parties. An open line of communication may make them more likely to negotiate solutions.

Find a subletter or someone to take over the lease

If you can fill your unit so rent payments aren’t disrupted, your landlord may waive early termination fees. Subletting the apartment can be the easiest option. In that case, your name remains on the leasing agreement, but someone else lives in the unit and pays rent. If you opt for a subletter, finding a trustworthy prospective tenant is essential. You remain liable for any damage to the apartment or missed payments. Certain landlords don’t allow subletters, so reviewing your lease is important.

You can also find a replacement tenant to take over your lease for the remainder of your contract. In this case, their name replaces yours on the lease. They become responsible for rent and all legal obligations. Landlords typically have to approve new tenants, so the new tenant may have to complete applications and undergo a background check. This is often a longer process than subletting. However, it leaves you with less liability.

Do you have to break the lease because of a disaster or economic downturn?

If circumstances outside your control make it impossible to maintain your portion of a lease agreement, you might have options. See if your contract has a clause that allows you to break your rental agreement without consequences in the event of a natural disaster.

During major economic downturns, some landlords or property managers offer hardship programs to help you stay in your apartment during financial challenges. Or the government or nonprofit organizations may offer resources and economic aid to assist renters and property managers during these circumstances.

The bottom line

Breaking a lease is often stressful, but it doesn’t have to hurt your credit score. If you have to leave your rental unit before your lease is up, make sure you understand your rights as a tenant as well as any penalties you may face. Unpaid rent and fees could bring your credit score down, but you may be able to work on a solution with your landlord, especially if you have a good relationship.

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